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Economics Formulas

Terms in this set (19)

GDP (Income Approach)
W + I + R + P (wages + interest payments + rent + profits)
GDP (Expenditure Approach)
GDP = C+I+G+Xn
(Consumer Spending)+(Investments)+(Government Spending)+(Exports-Imports(Net Exports))
GDP Deflator
(Nominal GDP)/(Real GDP)*100

A price index used to adjust nominal GDP to arrive at real GDP.

Called the 'deflator' because nominal GDP will usually over-state the value of a nation's output if there has been inflation.
GDP Growth Rate
(Current GDP-last year GDP)/(last year GDP)*100
Inflation Rate
(Current CPI-Previous CPI)/(Previous CPI)*100
Real Interest Rate
Nominal Interest Rate-Inflation Rate
Unemployment Rate
(Number of Unemployed/Labor Force)*100
Money Multiplier
1/Reserve Requirement Ratio
Quantity Theory of Money
MV=PY
Money Multiplier (MPC&MPS)
MPC+MPS=1
Spending Multiplier
1/MPS or 1/(1-MPC)
Tax Multiplier
-MPC/MPS

or

Spending multiplier-1
CPI
(price of market basket/price of market basket in base year) x 100

a weighted average of the prices of a selected
basket of goods and services relative to
their prices in some base-year.
labor force participation rate
labor force/adult population x 100

percentage of population that is in the labor force
Real Income
nominal index/price index in hundredths
Disposable income
Gross Income-Net Taxes
Net Taxes
taxes paid - transfers received
Real Interest rates
nominal interest rate - inflation rate
nominal interest rate
Real Interest Rate + Expected Inflation
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